Days before R1.26-billion in frozen funds was due to be released to Gupta-linked Chinese rail group CRRC, the Gauteng High Court in Pretoria on Tuesday handed down an order that the monies remain frozen until the company provides a bank guarantee for the same amount to the South African Revenue Service (Sars).

An additional R1.5-billion will also remain frozen pending a bank guarantee, meaning a staggering R2.76-billion will remain preserved while Sars finalises a tax claim against CRRC.

The taxman had rushed to court to prevent the release of the funds that the South African Reserve Bank froze three years ago "based on irregular outflows and inflows from an Exchange Control perspective".

Underlying the Reserve Bank's action at the time was evidence first revealed by amaBhungane and our #GuptaLeaks partners that CRRC companies were paying a fifth of their revenue from Transnet locomotive contracts to Gupta offshore fronts as kickbacks.

The Reserve Bank later blocked additional amounts, which currently stand at R4.2-billion, but the initial tranche of R1.26-billion was due to be released on Saturday, 12 December under a rule that funds must be unfrozen after 36 months.

Sars – which has been preparing a multibillion-rand tax bill against local CRRC subsidiary CRRC E-Loco Supply based largely on evidence that the company had deducted the kickbacks from its taxable income – argued that "that the moment the funds are released it will be externalised".

Tuesday's court order – the result of an agreement between Sars and CRRC E-Loco Supply – also ruled that an additional R1.5-billion be preserved in Sars' favour.

AmaBhungane understands that Sars asked for this amount to be ring-fenced based on preliminary assessments of the company's tax bill. Although the 36-month period for freezing the remainder of the R4.2-billion frozen by the Reserve Bank is not due to expire anytime soon, the bank could decide to unfreeze the money before that time.

The legal challenge is a victory for Sars, though the combined amount of money preserved under the order, R2.76-billion, is less than the R3-billion-plus that Sars said in its founding papers it believed "on reasonable grounds" to be due, including penalties and interest.

In its papers, Sars had also asked the court to appoint a curator to take over CRRC E-Loco. However, no curator is to be appointed in terms of the final order.

The Reserve Bank's reason for the initial freezing of the CRRC billions was that the company had broken exchange control rules by claiming to be exporting money only for the import of locomotives, while in fact it was using 21% of the funds to pay Gupta kickbacks offshore.

In its attempt to ensure the money stays in the country, Sars argued that it was left short-changed by CRRC when the company included kickbacks in its tax-deductible cost of sales.

Sars' own investigation drew on amaBhungane's comprehensive exposé in June this year on the Guptas' loco heist.